“Give me control of a nation’s money, and I care not who writes it’s laws…” Meyer Armschel Rothschild 1790

“If you want to be the slaves of banks and pay the cost of your own slavery, then let the banks create money… Josiah Stamp, Governor of the Bank of England 1920

Money is the medium which we use to exchange goods and services – so whoever controls the issue of money is potentially in a very powerful position.

Money is essential - without it, buying and selling would only be possible through exchange of goods themselves – hopelessly inconvenient. To keep trade and economic activity going, there has to be enough of this medium of exchange called money in existence to allow all this buying and selling to take place. When there is plenty, the economy booms. When there is a shortage, there is a slump. In the Great Depression, people wanted to work to earn money to support themselves, they wanted goods and services, all the raw materials for industry were available etc. yet national economies collapsed - why? …because there was far too little money in existence to allow full trading to take place. The only difference between boom and bust, growth and recession, is money supply.

So who is responsible for making sure that there is enough money in existence to cover all the buying and selling that people want to engage in? The answer is that it is almost entirely controlled by private banks through the process of “lending”.

The popular concept is that when a bank lends, it is simply lending money that other people have deposited with it. This is very misleading - the money loaned by banks is in fact new money created by them out of nothing. After all, when an overdraft or loan is made to someone, nothing is transferred from the accounts of those who have made deposits. All that happens is a note is made on the borrower’s account that he can spend up to, say, £5000. There may have been nothing in his account before that, but suddenly the borrower is allowed to make out cheques and draw cash to pay for goods and services, up to £5000. As he does so, this is actually new money being introduced into the economy. The people he pays will in turn use that money to pay for goods and services. Today in the developed world more than 95% of the total money supply has come into existence in this way as personal and business loans, mortgages, overdrafts etc. provided by commercial banks and financial institutions. However, borrowers must eventually repay the loans and pay interest to the banks in the meantime. So today’s money is in fact created by private interests for private profit. Only cash, which is provided by the government and now accounts for just 3% of the total money supply in Britain, (having fallen from nearly 50% just fifty years ago) is provided interest free.

Since the money supply is now almost entirely made up of loans etc., more money must be lent out to keep the economy going. This is why most of us are inundated with offers of loans, credit cards etc. If people don’t borrow or banks don’t lend, there will be a fall in the amount of money circulating, resulting in a reduction in buying and selling - a recession, slump or total collapse will follow depending on how severe the shortage is.

The increase in loans etc. created by banks etc. over the years is conclusive proof that banks do create “money” out of nothing – in Britain it was £1.2 billion in 1948 up to £14 billion by 1963 up to £680 billion by 1997. These are big increases in real terms even allowing for inflation - they have enabled the economy to expand enormously, and as a result living standards for many people have improved substantially.... but it has been done on borrowed money. What is credit to the bank is debt to the rest of us. [6]

This has some pretty far reaching implications - after all banks are businesses out to make profits from the interest on the loans they make. Since they decide to whom they will lend, they effectively decide what is produced, where it is produced and who produces it, all on the basis of profitability to the bank, rather than what is beneficial to the community. With bank created credit now at 95% + of money supply, entire economies are effectively run for the profit of financial institutions. This is the real power, rarely recognised or acknowledged, to which all of us including governments the world over are subject. Our money, instead of being supplied interest free as a means of exchange, now comes as a debt owed to bankers providing them with vast profits, power and control, as the rest of us struggle with an increasing burden of debt.... There is much less risk to making loans than investing in a business. Interest is payable regardless of the success of the venture. If it fails or cannot meet the interest payments, the bank may seize and later sell the borrower’s property. Borrowing is extremely costly to borrowers who may end up paying back 2 or 3 times the sum lent. The banks are acquiring an ever increasing stake in our land, housing and other assets through the indebtedness of individuals, industry, agriculture, services and government - to the extent that Britain and the world are today effectively owned by them.

Furthermore, central banks such as the U.S. Federal Reserve and the European Central Bank which regulate the commercial banks and set interest rates are controlled not by elected governments but largely by private interests from the world of commercial banking. They are basically private banks. Even the Bank of England, although nationalised in 1946 (i.e. its shares were acquired by the state) is still largely under private control by virtue of the fact that its Court of Directors, the Monetary Policy Committee and its executive directors, who are responsible for the day to day running of the bank, are all dominated by bankers and conventional economists.

The debt burden on individuals and businesses is always going to increase under this system, because when a bank creates money by making a new loan, no extra money is created and fed into the economy to pay the interest on that loan… The existing money supply would soon be depleted by interest payments to the banks, if more money was not found from somewhere. The only way for interest payments to be kept up therefore, is for more loans to be taken out. Although some individuals and businesses may pay off their debts or get by without additional borrowing, overall people and industry must keep borrowing more and more to create the money in the economy required to service the overall burden of debt. The level of debt which stood at £680 billion in 1997 means we are borrowing about £60 billion of new “money” into existence each year to cover interest payments. However, people and industry can’t go on increasing their debt indefinitely even with lower interest rates - sooner or later they will no longer be able to afford to, and will gradually stop borrowing more money into existence. When this happens, the economy will go into decline. The system thus contains the seeds of its own destruction.

Not only are individuals and businesses in debt up to their eyeballs, but so are whole nations. Governments borrow money from banks in a similar way as individuals - in return they issue to the lender exchequer or treasury bonds - otherwise known as government stocks or securities. These are basically IOU’s - promises by government to repay the loan by a particular date, and to pay interest in the meantime.

The result of government borrowing is the national debt. British national debt now stands at about £400 billion - the annual interest on that debt is around £25 - £30 billion. The government raises this money by taxing you and me. National debt is up from £26 billion in 1960 and £90 billion in 1980. Successive governments have borrowed this money into existence over the years.

However, if banks can create money out of nothing, then so can the state... in fact it already does so with the relatively very small amount of cash in the economy. Abraham Lincoln considered it a primary duty of the government to provide a nation with the medium of exchange to enable the economy to function. He proved the point by funding the Union war effort in the U.S. civil war with government created currency called “Greenbacks”, rather than taking out huge loans from the banks. He was of course assassinated and the creation of greenbacks was terminated. 100 years later John F. Kennedy had similar ideas.

So instead of creating it themselves and spending it into the economy on public services and projects, boosting the economy and providing jobs, governments get banks to create it for them and then borrow it at interest.

It all started in 1694, when King William needed money to fight a war against France. He borrowed £1.2 million from a group of London bankers and goldsmiths. In return for the loan, they were incorporated by royal charter as the Bank of England, which became the government’s banker. Interest at 8% was payable on the loan and immediately taxes were imposed on a whole range of goods to pay the interest. This marked the birth of national debt. Ever since then the world over, governments have borrowed money from private banking interests and taxed the population as a whole to pay the interest. Governments could create as much money as is necessary to fund public projects and once spent by them into the economy when the projects are paid for, it would continue to circulate as interest free money. Instead the government constantly whines that there is never enough money for schools, hospitals etc. because it borrows much of what it needs, and this creates added expense through interest charges.

To fund a war effort, governments borrow massive amounts from the banks – British national debt soared as a result of fighting two world wars (from £0.7 billion in 1914 to £23 billion by 1946) .. War can be very profitable for bankers. By supplying credit to those of whom they approve and denying it to those of whom they disapprove, international bankers can not only create boom or bust supporting or undermining governments, they can also determine the outcome of a war….
Germany was not defeated on the battlefield in World War One – international bankers withdrew funding, whilst US banks funded Bolshevik agitators, armed by Moscow, who infiltrated Germany, triggering strikes and massive popular unrest. All this disrupted supplies and totally undermined the war effort – Kaiser Wilhelm abdicated and Germany was forced to surrender [7]. Thereafter, huge reparations were demanded, ensuring the total collapse into debt of the Weimar republic. International bankers set up the Dawes “recovery” plan which plunged Germany into even greater debt and economic chaos, creating the conditions for the rise of Hitler’s Nazi party. The same bankers went on, usually through highly covert means, to fund the rearmament of Germany and later the allies. As soon as a war was on the horizon, lending took place and the great depression came to an end almost over night. The names behind all this, such as Warburg, Rothschild and Rockefeller are still major power brokers in the banking world today [8].

More recently, one of the greatest contributions to debt in the third world was the fourfold increase in the price of oil in the 1970’s. Third world countries in severe difficulties because of the oil price hike, took out loans on crippling terms, as interest rates were raised sky high in the mid to late ‘70’s ...and hey presto, the entire third world was suddenly indebted to the banks as well. Was this just some economic “accident”, was it just an OPEC decision to raise oil prices, or did someone else approve it as part of a bigger strategy? It is said that at the 1973 meeting of the Bilderberg group in Sweden, which was attended by top executives of the so called “Seven Sisters” oil cartel (the world’s 7 biggest oil companies B.P. Texaco etc.), a consensus was reached to bring about the oil price increases that subsequently followed.

It is widely, but mistakenly, believed that the purpose of the World Bank and the International Monetary Fund (IMF) is to encourage development and relieve poverty in the third world, but in practice these organisations have added to the impoverishment of millions. They are based in Washington, they operate behind closed doors, they make loans, adding to the burden of debt and interest, and furthermore, the loans have strings attached in the form of “Structural Adjustment Programmes” (SAPs). SAPs are the response to the fact that so many countries could no longer meet the interest repayments on the big loans made since the ‘70s, thanks to the increased interest rates fixed by the banks. In practice, structural adjustment means major adjustments to economic and monetary policies to produce income to enable interest payments to be met. It has led to a corporate take-over with the sale of government and national assets by privatisation, and massive cuts in public spending at the expense of basic healthcare and education etc. - also big drives to increase exports of whatever can be exported. This for example, leads to clearance of forests by timber companies, often foreign, for timber export, or for raising cattle to supply beef to the west, use of prime agricultural land for growing cash crops for consumption in wealthy countries, which already have surpluses, e.g. “out of season” vegetables, cut flowers, rice paddies in India becoming prawn farms to supply Japan etc. etc. This reduces staple food production for local consumption, putting prices up, and is the process that forces people from the land into city slums and shanties. Big plantations in the hands of multi-nationals or a rich local elite (well illustrated in Brazil) become the order of the day. Finally, there is absolute adherence to the principles of the “free market” and “free trade” – the effects of which have been noted already. With tariff barriers down, there are more imports, which increases the trade deficit, necessitating more loans with more interest payable, leading to more S.A.Ps with more strings attached, such that countries are now being forced to hand over control of their resources to outsiders, such as Mexico has effectively done to the U.S. with its oil industry.

In 1997 we saw how even the much praised “tiger economies” of the far east were brought under pressure by international speculators, with currencies collapsing. Most have fallen into line - Thailand, South Korea, Indonesia have taken out IMF “rescue packages” involving the taking out big loans with interest and all the other usual strings attached, that have already been mentioned. The same thing happened to Russia a year or so later. Very recently Joe Stilgitz a former chief economist at the World Bank blew the whistle on both the World Bank and the IMF to investigative journalist Greg Palast. It was revealed thatnations were being required to sign detailed secret agreements, which committed them to sell off their key assets, and to take devastating economic steps. If they didn’t follow these steps they would be cut off from all international borrowing – clearly disastrous under the current system where no business, corporation or nation, can survive without credit. Palast now has recent inside documents from Argentina - the secret Argentine Plan - signed by World Bank President, James Wolfensen. Argentina is now in chaos, having had 6 presidents in as many weeks, because the economy is in ruins. And this happened because, in the late ‘80s, the IMF and World Bank ordered them to sell off public assets, such as the water system. And this is just one country. The Buenos Aires water system was sold to the now notorious Enron as was the pipeline between Argentina and Chile. Furthermore it has been revealed that the leaders and chief ministers of these countries have salted away hundreds of millions of dollars into Swiss bank accounts in the process, whilst the IMF and the World Bank with full knowledge of what was happening, have looked the other way. The water systems, railways, telephone companies, nationalised oil companies etc. are then transferred to western corporate interests for next to nothing. They have been handed over, generally, to the likes of Citibank which grabbed half the Argentine banks, British Petroleum which grabbed pipelines in Ecuador and Enron which has grabbed water systems all over the place. To make matters worse they don’t even run the utilities properly - but this is much more than just a few fat cats getting rich at the public expense – it’s about absolute power and control and the cosy relationships between banking and big business. [9]

By raising interest rates the Bank of England has the power to raise the value of the pound against other currencies notably the Euro, making British goods expensive to sell in the rest of the EU. The European Central Bank may keep its interest rates down, depressing the value of the Euro. To avoid the trading problems that this can create, sections of industry involved in exporting to the rest of the EU, support the single currency. With power to adjust interest rates across the world, banking cartels could certainly put pressure on the British people so that we end up agreeing to accept the single currency, and with it, centralised control desired by many big corporations and financiers - those who have also shaped the EU. Indeed the heads of the central banks have their own banking forum in the form of the Bank of International Settlements based in Basel, Switzerland.

Banks making losses is almost unknown. In a bust cycle, they make their profits by seizing the assets of those who can no longer repay the loans, as a result of a downturn in business, through banks putting up interest rates, which reduces the amount of money in circulation. Later they can sell the seized assets, when they issue money and make loans so that there is money for them to be purchased by others, in a wonderful example of having your cake and eating it. In the boom cycles, there are masses of interest payments coming in as more and more money is issued and lent. The 1980’s property boom came about as a result of a huge influx of new money coming into circulation through massive lending. Prices soared with all the credit available, ensuring we all went more and more into debt with ever larger mortgages to our homes. Then interest rates rose.... and bankruptcies and repossessions in 1991and 1992 reached record levels. A financial crisis, usually brought about by a big interest rate increase, results in the banks seizing assets and adding to their wealth.

Every time you make a purchase, you are making a payment into the banking system, for built in to the cost of whatever item you are purchasing, is the interest that the producer, manufacturer, wholesaler, retailer has had to pay to a bank. Add to that, the fact that you might be paying interest on a mortgage, an overdraft, a credit card, or all three. You are also paying the interest on the national debt through your taxes, and your council tax is hiked because the local authority is in debt as well…. You begin to realise just how much wealth is siphoned off to the banks and how many extra hours you have to work and struggle to create this wealth.

This is the power and control that debt has over us all and gives to those to whom we are in debt. If you buy a house in this country with a large mortgage, by the time you have paid off the loan, you will have paid for the house about 3 times over, and in the meantime can you really say you own it, because if you can’t meet the repayments (and you have no control over the interest rates charged) you’re out. Is it any wonder that the traditional teachings of Christianity and Islam so wisely forbid the loan of money upon usury. Debt is truly the modern form of slavery.

To return to where we started, money is the means of facilitating the exchange of goods and services. There is nothing wrong with creating it out of nothing, because this is the only way to provide the means of exchange. To avoid inflation, the amount that is printed or created must be matched to the amount of economic activity that is taking place. What is wrong is that the right to do this has almost entirely passed from the state to private interests who create it as loans for private profit. Consider for a moment a system where a democratically elected government takes over the issue of money and decides to stimulate the economy by making interest free loans through a national credit office (the cost of which could be met by a modest level of taxation or the levying of fixed administrative charges on borrowers or even a share in the profits of a borrower’s business venture or a combination of all three). Thousands of entrepreneurs would take up loans on such attractive terms, a major cause of inflation would be gone, and economic activity would boom creating masses of those ever elusive jobs that governments profess themselves to be so concerned about. However it is clear that many bankers, economists and almost all politicians do not really understand the existing system and its far reaching effects. They support it largely through ignorance, and the fact that it has been in use for years and there are no alternatives operating anywhere. However there have always been those who realise how the introduction and maintenance of an usury banking system can be used to retain power and control and they rely on the continuing ignorance of the majority. It is now so universal that there is hardly a man, woman or child on the planet, who is not paying the price of this iniquitous system.